Six major banks join forces to support the climate transition of the aeronautics industry

Citigroup and Bank of America are partnering with four major European banks and a clean energy nonprofit to reduce carbon emissions generated by the global aviation industry.

The Aviation Climate Aligned Finance Working Group will focus on creating a methodology that banks can use to assess and disclose how successful their industry clients are in achieving certain climate goals each year, the companies involved said Thursday.

The framework will be similar in design to the climate finance guidelines that have already been developed for shipping, as well as a new set of guidelines being rolled out for the steel industry.

“The financial sector has set its own net zero targets and is now in a position to support the aviation industry,” Munawar Noorani, Citi’s global co-head of aviation, said in an interview Thursday.

In addition to Citi and BofA, the task force includes Standard Chartered in London, as well as BNP Paribas, Crédit Agricole CIB and Société Générale in France. The six banks will join the Center for Climate Aligned Finance at RMI, formerly known as Colorado-based Rocky Mountain Institute.

Globally, the aviation sector accounts for 2.5% of carbon dioxide emissions, according to the task force, which said those emissions are expected to rise significantly through 2050.

Between 2013 and 2019, carbon dioxide emissions from commercial aviation increased by 33%, according to a 2020 report of the International Council on Clean Transportation. In 2019, the United States, China and members of the European Union were responsible for more than half of all carbon dioxide emissions from passenger flights, the council said.

The International Air Transport Association, whose membership includes 290 airlines from around the world, has pledged to achieve net zero carbon emissions by 2050.

To achieve this goal, the aviation sector is investing in more efficient aircraft, supporting the development of new technologies and accelerating the transition to sustainable aviation fuels, according to the task force, which said the financial sector will play a crucial role in the financing of projects. involved in the transition of the aeronautical industry.

The task force, which will include specialist aviation bankers from each of the participating companies, plans to create its framework before the end of the year, the banks said.

Noorani says it makes sense to act quickly, in part because of recent progress in determining how banks can help mitigate climate change. “The timetable is ambitious, and that is why it is crucial that we start work as soon as possible,” he said.

The task force will eventually invite all members of the Net Zero Banking Alliance to join, according to Nourani.

The Net-Zero Banking Alliance spear in April 2021 with 43 member banks. It now has 108 member banks worldwide with combined assets of $68 trillion, or 38% of global banking assets, according to the United Nations.

Banks that join the alliance must commit to reducing emissions from their loan and investment portfolios to net zero by 2050 and, within 18 months of joining, set targets for 2030.

The methodology that will be created by the new task force could accelerate aviation decarbonization efforts in a number of ways, according to Sola Zheng, an aviation researcher at the International Council on Clean Transportation.

First, the group’s work can encourage airline investors to set climate goals and strategies. If airlines already have targets in place, investors will be able to use the framework to measure those companies’ progress and hold them accountable, Zheng said in an email.

Second, the task force framework could help accelerate the production and deployment of sustainable aviation fuel, Zheng said.

Finally, the task force’s efforts could put more pressure on aircraft lessors, which “don’t face as much public scrutiny on climate change as airlines do”, according to Zheng.

The goal of developing the methodology by the end of the year “should be achievable if the workshops prove productive,” Zheng said.